When an insurance company does not process and pay claims honestly and in a timely manner, it may be acting in bad faith. Fortunately, policyholders have an option to address it.
Insurance companies have an obligation to act in good faith and fair dealing with their customers. There are several examples of situations where the insurance company may act in bad faith.
If the insurance company delays processing the claim, denies it without a reason to do so under the policy, or intentionally underpays a claim they may be acting in bad faith. The insurance company should investigate the claim and ask for additional information to resolve outstanding questions.
It may also be acting in bad faith if it provides the policyholder with false or misleading information. The insurance company cannot refuse to settle a claim with a policyholder if it should have done so under the policy terms.
Addressing the situation
First, it’s very helpful for the policyholder to have a copy of the insurance policy readily available, as well as copies of any claims that were submitted, and letters or emails that the policyholder received.
If contacting the insurance company to resolve the concern is not successful, the policyholder may choose to file a complaint with the state insurance regulator and to file a lawsuit against the insurance company.
If the policyholder proves that the insurance company acted in bad faith, they may be entitled to damages in addition to the original amount that should have been covered.